Arkansas Attorney General Leslie Rutledge filed a consent judgment Wednesday resolving a consumer-protection lawsuit in Washington County against Automatic Auto Finance Inc., Jorja Trading Inc., Cashfish Motor Pawn Inc. and Monte Johnston for unconscionable and deceptive business practices involving the sale of used motor vehicles.
The lawsuit, filed in 2016, accused Johnston and the companies he owns of selling used cars at high prices to customers who were likely to default. When customers did default, their cars would be repossessed, leaving consumers still owing money, and the vehicle would be resold to other consumers, the lawsuit said.
Johnston is banned for five years from operating a used motor vehicle company that offers credit, financing or engages in the collection of debts related to used motor vehicles or buy-here-pay-here businesses.
In addition, current and former customers of AAF may be eligible to receive a credit for the amounts they currently owe.
The consent judgment secures more than $1.5 million in credits for 5,695 customer accounts and levies $3 million in suspended penalties against the defendants for any violations of the judgment. AAF and its affiliates are also required to pay $238,000 to the attorney general's office for its litigation costs.
Victims should file a consumer complaint on ArkansasAG.gov or call (800) 482-8982.
"Buy-here-pay-here dealerships cannot take advantage of vulnerable customers, and I will do everything in my power to ferret out those bad actors to protect Arkansans," Rutledge said Wednesday in a news release.
AAF and its affiliates claim that they have not violated any state laws.
The settlement reforms a number of AAF's business practices. The company is now:
- Prohibited from doing business under multiple different names;
- Required to develop and use underwriting practices to ensure consumers aren't trapped in a vehicle purchase contract they have no reasonable way of repaying;
- Ensuring consumers have the opportunity to have a possible purchase inspected by a third party to verify its roadworthiness;
- Not allowed to conduct verbal sales pitches in Spanish or Marshallese and require a consumer to sign a contract in English;
- Must produce a copy of the contract in the language of the verbal sales presentation to those consumers who consummate the purchase; and
- Required to modify its vehicle servicing plans and practices as well as its irregular payment schedules.
Other practices reformed under the consent judgment include procedures for repossession of vehicles after payment default, collection practices for customers who are in payment default, legal actions taken against defaulting customers and garnishment procedures.
Two landmark provisions it includes are a prohibition against suing defaulting customers in any small claims court using relaxed procedures that don't afford adequate notice to consumers and a program offering consumers the right to cancel a vehicle sale within three days. Both are subject to restrictions set out in the judgment.